Your Most Important Retirement Planning Step

One of the most important decisions you will make regarding your future is selecting an investment professional to guide you through your retirement planning. Given the significant impact a quality financial advisor can have on your wealth and peace of mind, choosing the right person—one who puts your interests first—is crucial. A comprehensive retirement plan is achievable, but it relies on getting honest answers from an advisor who operates with your best interests at heart (AKA a fiduciary). As you begin to think seriously about your retirement years, it’s vital to know the key questions that will help you select the best path forward in your retirement journey.

Defining Your Goals Before You Meet with an Advisor

The first step in finding an advisor who suits you is to assess your own financial sophistication and identify the areas where you need the most help. You may choose to pursue advice from a discount brokerage, a robo-advisor, a full-service brokerage, or a Registered Investment Advisor (RIA) like Southwest Michigan Financial, LLC.

Regardless of the option you select, preparing for your initial meeting is essential. Next, write down your financial goals in order of priority. Then, be prepared to share the status of your emergency fund, any upcoming major expenses (like home renovation or college for children/grandchildren), and your outstanding debts. The more knowledgeable and accurate you are about your goals and challenges, the easier it will be for an advisor to tailor a plan specifically for your retirement needs.

Finally, and most crucial, you should know whether the advisor is a fiduciary. This means they are legally required to adhere to the definition of a fiduciary: they must always put your best interests ahead of their own. Asking about their experience, education, and career motives can give you valuable insight into whether they will truly put your interests first.

Questions About Risk and Savings Strategy

Asking the right retirement questions may be tricky. Here are 12 key questions to help establish a strong foundation for your retirement strategy:

  1. What to Ask: Generally, what do you believe are the most significant risks in retirement?
    Why: Understanding frequent risks allows you to plan for them and avoid unwanted surprises.
  2. What to Ask: How much do I need to retire comfortably in the lifestyle I desire?
    Why: Knowing the true cost of your desired lifestyle helps you prioritize necessities and shape your financial goals.”
  3. What to Ask: How long will the money in my retirement fund last?
    Why:     If there is a possibility that you could outlive your funds, you need to know and plan accordingly.
  4. What to Ask: When should I start saving for retirement?
    Why: While it’s never too early, starting later requires a more aggressive, goal-oriented approach.
  5. What to Ask: How much can I save each year?
    Why: This goal-setting mechanism helps you watch your fund grow. A good rule of thumb is to save 15-20% of your income.
  6. What to Ask: Does my employer offer any extra help in saving like matching contributions?
    Why: Always take advantage of employer-sponsored retirement savings plans, such as a 401(k) match.
  7. What to Ask: Will the way I invest change as I age?
    Why: Your investment strategies should evolve as your lifestyle and risk tolerance change closer to retirement.

Questions About Retirement Income, Taxes, and Social Security

As you transition from the accumulation phase of life to the distribution phase, the questions shift to managing your income streams efficiently:

  1. What to Ask: How should I plan to spend and from which accounts and when?
    Why: Your advisor can help you set up a spending plan that dictates which accounts (taxable, tax-deferred, or tax-free) you should draw from first to optimize your long-term income.
  2. What to Ask: How can I control taxes in retirement?
    Why: Knowing what you can do to control and minimize taxes allows you to optimize your retirement fund and keep more of your hard-earned money.
  3. What to Ask: How would working during retirement affect my financial position?
    Why: Some retirees work without financial repercussions, but it is best to know what your limits are concerning income thresholds and the potential impact on your Social Security benefits.
  4. What to Ask: When/how do I apply for Social Security benefits?
    Why: To achieve optimal financial gain, it is crucial to determine the best time to apply. Filing too early can result in permanent penalties and a lifetime decrease in your benefit.
  5. What to Ask: Should I take my pension as a lump sum?
    Why:     Review your financial goals and the terms of your pension with your advisor to determine if a lump sum or periodic payments are the smarter financial move for your situation.

Choosing the Right Investment Products for Your Retirement Future

Our Registered Investment Advisor (Chuck Henrich, RIA) will help you select appropriate products or services by discussing:

  • Stocks and Bonds: Understanding how the balance of risk in your portfolio should shift as you approach retirement.
  • Qualified versus Non-Qualified Money: Differentiating between accounts that offer tax advantages (like IRAs, Roth IRAs) versus non-qualified accounts (brokerage and bank accounts) can make a difference in how much of your retirement income will go to taxes.
  • Annuities: Discussing how annuities may be used to replace the defined benefit pension, offering a guaranteed lifetime income stream.
  • Alternative Investments: Reviewing the potential role of less traditional investments like precious metals, real estate or private placements.

When you are ready to begin your retirement planning journey, the team at Southwest Michigan Wealth Management, LLC is here to help. As a fiduciary, we have your best interests as our first priority.

Schedule a free, no-obligation consultation today to review your retirement portfolio. Give Chuck a call at (269) 323-7964 for an immediate answer to your questions.

This blog is created and authored by Chuck Henrich (Content Creator) and is published and provided for informational and entertainment purposes only. The information in the Blog constitutes the Content Creators own opinions and it should not be regarded as a description of services provided by Southwest Michigan Financial, LLC. The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice.

Nothing on this Blog constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. The Content Creator and Southwest Michigan Financial, LLC assumes no responsibility or liability for any consequences resulting directly or indirectly for any action or inaction you take based on or made in reliance of the information, services or materials provided within this blog.

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